Metcash concerned with Grocery Code of Conduct ‘extra red tape’ on its suppliers

Metcash concerned with Grocery Code of Conduct ‘extra red tape’ on its suppliers

Australian wholesaler and distributor of groceries Metcash has made its submission to the current Senate inquiry into the Food and Grocery Code of Conduct, saying that it has opted not to sign up to the Code at this time.

The Senate Economics Legislation Committee is currently hearing submissions to its Inquiry into the Competition and Consumer (Industry Codes — Food and Grocery) Regulation 2015. On 5 March 2015, the Economics Legislation Committee resolved, under Standing Order 25(2)(a), to inquire into and report by 31 March 2015 on regulation of the Food and Grocery Code of Conduct.. On 26 March 2015, the committee resolved to extend the reporting date to 14 May 2015. Submissions closed on 13 March 2015.

Metcash ‘deeply concerned’ about adverse impacts

In its submission to the Inquiry, Metcash said it was concerned about the impact on its small retailers and small suppliers of implementing the Code.

Metcash said the “complexities” surrounding its wholesale business model meant it needed to “clearly understand how the Code will impact on its business and that of its small retailers and hundreds of small suppliers before it is in a position to consider the matter on a fully informed basis”.

Metcash Group Chief Executive Officer Ian Morrice said many of Metcash’s existing practices were “consistent with the requirements of the Code and so the variations will be more administrative rather than substantial”. He said the Metcash business model “provides the ability for many small and local suppliers to have their products distributed to the largest and most diverse retail base in the country”.

Trial period will allow Metcash to ‘assess impact’

However, Metcash said it would voluntarily adopt the Code on a trial basis for 18 months but only for elements that are applicable to its business and only for the purpose of evaluating the impact of administering the Code. Metcash said it hoped that at the end of the trial period it would be “in a position to opt in to the Code”.

“We will implement a compliance program to align our business conduct to the core principles of the Code,” said Ian Morrice, Group Chief Executive Officer, Metcash Limited in the submission to the Inquiry.

“We are concerned by the potential unintended consequence of opting in to the Code,” Mr Morrice said. “We are also deeply concerned by the burden of additional red tape for the many small and large businesses we support and adopting this phased approach will allow us to evaluate and inform our position as to formally opting in to the Code at that time,” he said.